22 Feb 2019

Capital gains tax: National should dial back hyperbole, engage in debate - Finance Minister Grant Robertson

12:31 pm on 22 February 2019

The opposition needs to dial back hyperbolic criticism of the Tax Working Group's recommendations and engage in reasoned debate, Finance Minister Grant Robertson says.

Grant Robinson on Morning Report talking about the 2017 Budget

Grant Robertson in RNZ's studio. (File photo). Photo: RNZ / Rebekah Parsons-King

The government's working group released its proposals yesterday which included taxing land, farms and most shares and business assets - including the bach - but excluding the family home.

National Party leader Simon Bridges labelled the recommendations "an assault on the Kiwi way of life".

Finance Minister Grant Robertson told Morning Report Mr Bridges needed to turn "the hyperbole volume down a little bit".

"I think the Kiwi way of life is about giving people a fair go, I think it's about making sure that everyone is treated fairly ... that's what New Zealanders look for, that's why we set the working group up.

"What I would say to Simon Bridges and to the National Party is 'let's have a reasoned debate about this'.

"Because most other countries in the world have regimes like this and there are issues of basic fairness that need to be debated.

"It doesn't mean that every proposal will be accepted ... but let's debate what is a quite mainstream tax proposal compared to the rest of the world."

Mr Robertson said the recommendations from the working group showed that overall the tax system was working well but there were gaps.

Asked whether the introduction of a capital gains tax would make homes more affordable Mr Robertson said it was arguable, with some modelling in the working group's report pointing to improvements, while others did not.

"What we can say for sure, and in fact all 11 members of the group agree, is that there is a case for the extension of an income-to-capital ... regime to residential rental properties.

"If you go down that path then inevitably the end result will be a market that's fairer for first home buyers."

The reason the group proposed things like taxing shares in a KiwiSaver scheme was because it wanted to see income treated the same way however it was earned, Mr Robertson said.

And he said the recommendations were just proposals, and it remained to be seen what would be adopted.

Labour would be working with New Zealand First and the Green Party to come up with a plan that they all could accept, he said.

'This is a double taxation' - Amy Adams on capital gains

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Finance spokesperson Amy Adams Photo: RNZ / Richard Tindiller

National Party finance spokesperson Amy Adams told Morning Report the New Zealand way of life was about working hard, building up an asset and being able to reap the rewards of that.

"I think the Kiwi way of life is having a bach that you share with your cousins that's been in the family for generations, or growing up on a family farm or living in a rural community," Ms Adams.

"I think the Kiwi way of life is putting some aside for a rainy day and [not] feeling like you are going to be hit if you do and you're better off sending your money offshore or just blowing it all.

She said introducing a capital gains tax was "double taxation".

"People who owned property had worked very hard and had already paid tax on the money they used to buy the property.

"They've made a choice to go without, put a bit aside and try and build up an asset, and actually that's what we want New Zealanders to do."

She said a capital gains tax on small business, baches, farms, savings, and investments and shares would not push down house prices. Instead it would just make it hard for New Zealanders to build up a nest egg and would lead to more money going overseas.

She said she did not support putting a capital gains tax on residential houses because there already was one - the brightline test - and if one was imposed it would force up rents.

h] NZ First will not rush 'immediately to judgment' - Jones

NZ First is keeping tight-lipped over where it stands on the tax working group's recommendations on capital gains tax.

Associate Finance Minister and New Zealand First MP Shane Jones told Morning Report that while the party cared about equity outcomes, it was also pro-industry.

"All sorts of tax proposals often lead to unforeseen consequences.

"That's why we've got six, eight, ten weeks as politicians to derive a response, listen to various sectors in New Zealand and not rush immediately to judgment."

Mr Jones said he would be meeting with farming leaders to discuss the tax proposal in the coming weeks.

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